1) 1031 is for investment or business property, and it’s tax-deferred, not tax-free

At the federal level, a like-kind exchange applies to property held for productive use in a trade or business or for investment, and the gain is deferred, not eliminated. This distinction matters on the Gulf Coast because many owners blend personal use with rental use. Your CPA should help you document the intent and usage pattern so you don’t accidentally treat a lifestyle property like an exchange asset.

Practical Gulf Coast note: depreciation, improvements, and rental history can change the math dramatically at sale. I like investors to understand the full picture before we choose the next property, not after.

2) The 45-day and 180-day deadlines are not suggestions

In a deferred exchange, you must identify replacement property within 45 days after the transfer of the relinquished property, and the exchange must be completed within 180 days (or your tax return due date, including extensions, if earlier).  These are two separate clocks, and missing either can convert your exchange into a taxable sale.

3) A Qualified Intermediary is central, and “I’ll just hold the proceeds” can break the exchange

The IRS rules around deferred exchanges focus heavily on structure and timing, including how you avoid actual or constructive receipt of proceeds. The deferred exchange framework is laid out in the Treasury regulations. In plain terms, the sale proceeds generally need to be handled through the proper exchange structure, typically with a Qualified Intermediary, so you do not take control of funds in a way that disqualifies the exchange.

Investor habit that helps: treat your QI selection like you would a lender selection. Ask about their process, timelines, and how they handle identification notices.

4) “Boot” is where a lot of surprises happen, especially with mortgages and closing credits

If you receive cash, relief from debt, or other non-like-kind property in the exchange, you may trigger taxable gain to that extent. This is commonly referred to as “boot,” and it shows up in real-life closings as leftover cash, lender payoffs, prorations, credits, or debt that is not replaced at the right level.

I like to keep this simple: many investors aim to buy replacement property of equal or greater value and manage closing details carefully, but your CPA and QI should guide the specifics. For the IRS’s broader discussion of dispositions and exchanges, Publication 544 is a helpful reference point. 

5) Gulf Coast strategy matters: pick the right replacement, and plan for state and operational realities

Federal 1031 rules apply regardless of state, but state-level considerations still matter. For example, Alabama has specific nonresident withholding rules and FAQs that address 1031 exchanges in the context of withholding requirements.  Florida does not have an individual income tax, which can be a planning consideration, though federal rules still control the exchange itself.